This page provides current tax news for you to stay up to date with contemporary issues in taxation in the UK.
- Date: 14.09.05 - Tax legislation is 'Toppling Big Ben' say ICAEW
The Institute
of Chartered Accountants in England & Wales (ICAEW) has highlighted the
phenomenal increase in tax legislation over the past twenty-five years –
recording a 54% increase in the number of pages in the Finance Acts in the last
five years alone and a threefold increase since the early 80s. The research
follows the recent publication of the second Finance Act of 2005.
By
establishing a monitor of tax complexity called Big Ben’s Statutory Tax Burden, the
ICAEW’s Tax Faculty aims to highlight the burden on taxpayers by using a graphic
illustration of Big Ben – a symbol of British Parliament and law-making – to
show changes in the number of pages in successive Finance Acts.
Comparing the
number of pages in each Finance Act over the past twenty-five years is a simple,
but effective, method of showing how Big Ben is straining under the weight of
legislation. For example in the period 2000-2005 the average number of pages in
each year’s Finance Acts was 481 pages compared with an average of only about
157 pages in the early part of the 1980s.
The Finance
Acts today are more than three times as big as they were twenty-five years ago
and over each five-year period the increase in the number of pages has never
been less than 17 per cent. The most recent five-year period has seen an
increase of over 50 per cent over the previous five-year period.
The ICAEW Tax
Faculty is concerned that with the growing length of Finance Bills and only
limited time available for Parliamentary consideration, there is a lack of
consultation, scrutiny and thorough understanding about the effects the
legislation may have on taxpayers. Due to the amount of legislation they already
have to deal with, businesses are especially vulnerable to the burden of tax red
tape. There is a danger that
UK businesses
will suffer a competitive disadvantage due to the burgeoning tax legislation.
It could be
argued that the complexity in the tax law reflects both the need to counter
avoidance and the increasingly complex society in which we live. The ICAEW Tax
Faculty believes that much of the tax avoidance legislation is overly
complicated and poorly drafted, resulting in the need for amendments to be made
at a later date to iron out many of the problems that arise in practice. Other
highly developed countries have tax systems that work perfectly well with a tax
code and Finance Acts that are much shorter than those in the
UK. The ICAEW
will continue to campaign for a tax system that is no more complicated than it
need be, that is fair and reasonable and that has adequate processes to ensure
legislation is properly enacted and is then kept under regular review.
The volume of legislation over the past
twenty-five years
|
Year |
No of sections |
No of schedules |
Pages |
|
1979 |
25 |
5 |
16 |
|
1980 |
122 |
20 |
144 |
|
1981 |
139 |
19 |
163 |
|
1982 |
157 |
22 |
192 |
|
1983 |
48 |
10 |
59 |
|
1983 |
16 |
2 |
11 |
|
1984 |
128 |
23 |
196 |
|
1985 |
98 |
27 |
181 |
|
1986 |
114 |
23 |
199 |
|
1987 |
2 |
16 |
109 |
|
1987 1 |
104 |
9 |
102 |
|
1988 |
149 |
14 |
182 |
|
1989 |
188 |
17 |
275 |
|
1990 |
133 |
19 |
192 |
|
1991 |
124 |
19 |
185 |
|
1992 |
11 |
1 |
5 |
|
1992 |
83 |
18 |
176 |
|
1993 |
214 |
23 |
312 |
|
1994 |
259 |
26 |
463 |
|
1995 |
163 |
29 |
380 |
|
1996 |
206 |
41 |
463 |
|
1997 |
53 |
8 |
105 |
|
1998 |
166 |
27 |
422 |
|
1999 |
140 |
20 |
196 |
|
2000 |
157 |
40 |
613 |
|
2001 |
111 |
33 |
331 |
|
2002 |
143 |
40 |
494 |
|
2003 |
217 |
43 |
453 |
|
2004 |
328 |
42 |
634 |
|
2005 |
106 |
11 |
203 |
|
2005 1 |
72 |
11 |
160 |
The volume of legislation in each five-year
period
|
Period |
Total number of
pages |
Average number of
pages |
Increase over
previous period
% |
Cumulative increase
since 1980-84 |
|
1980 - 1984 |
765 |
153 |
|
|
|
1985 -1989 |
1,048 |
209 |
36 |
36 |
|
1990 - 1994 |
1,335 |
266 |
27 |
73 |
|
1995 -1999 |
1,566 |
312 |
17 |
103 |
|
2000 – 2005 |
2,888 |
481 |
54 |
214 |
Ian
Young, Technical Manager at the ICAEW Tax Faculty, said: “A tax
system is best if it can be kept as simple as it needs to be to satisfy all its
various purposes. This means that it can be clearly understood and is most
likely to meet various Government objectives and be straightforward for both
individuals and businesses – our research shows that taxpayers are being swamped
by a barrage of tax legislation.”
Through its
Ten Tenets Towards a Better Tax System campaign, the ICAEW Tax Faculty believes
that the tax system should be certain, properly targeted, subject to proper
consultation and be fair and reasonable.
Further
information on the ICAEW’s Ten Tenets Towards a Better Tax System can be found
at www.icaew.co.uk/taxfac
1.
A
copy of the Finance Bill 2005 can be found at http://www.publications.parliament.uk/pa/ld200506/ldbills/013/2006013.htm
Source: Tax Faculty, ICAEW - 14 September, 2005
- Date: 06.09.05 - Need to reduce small business tax compliance cost highlighted in ICAS member survey
Completing a tax return is the single event most likely to cause a small business to appoint its first accounting or tax adviser, according to a 'First Contact' member survey conducted by The Institute of Chartered Accountants of Scotland (ICAS).
ICAS members involved in small UK businesses or providing services to such businesses were asked to identify what business issues were most likely to trigger the need for a small business to seek contact with an accounting or tax adviser for the first time. The survey also contained subsidiary questions regarding steps that might be taken to simplify tax or improve the electronic services provided by H M Revenue & Customs (HMRC).
Respondents even said completing a tax return was more likely to trigger 'first contact' with an adviser than the preparation of accounts for the business. Furthermore, dealing with VAT was more likely to trigger advice than general business planning or choosing the right business structure.
Ian Dewar, Convenor of the ICAS Small Business Task Force, said: "This survey highlights the degree to which small businesses are forced to give priority to tax compliance, even to the detriment of fundamental planning and organisation that might be important in generating future business prosperity. Healthy businesses are good for the economy, and proprietors should be encouraged to seek the right advice that will assist them in getting established and seeking business growth.
"The UK's Government is rightly saying that it wishes to reduce the burdens on small businesses, but is asking them at the same time to undertake onerous compliance responsibilities for which our survey shows they require professional assistance. This comes at a cost which may preclude small businesses from seeking advice on more crucial business issues.
"We would applaud any steps that can be taken to simplify tax or streamline compliance. Responses to this survey indicate that radical action is needed to prevent businesses from being swamped by red tape."
The ICAS report on its ‘First Contact’ Survey, concerning first appointment of accounting or tax advisers by UK small businesses, can be found at: http://www.icas.org.uk/site/cms/download/tax_first_contact_survey_report_20050829.pdf (pdf document)
Source: ICAS - 06 September, 2005
- Date: 01.09.05 - ICAS Calls for taxpayers' needs to be central to review of HMRC's electronic services
The Institute of Chartered Accountants of Scotland (ICAS) has called for a strategic alliance between H M Revenue & Customs (HMRC) and the taxpayer and tax agent community to determine the future of HMRC's electronic services.
Lord Carter of Coles is conducting a review of HMRC's online services in the wake of the collapse of its IT systems for tax credits, personal tax returns, stamp duty land tax and payroll. ICAS has told Lord Carter that it believes HMRC's e-services strategy is fundamental to the efficient administration of taxes in future but sees little evidence of any coherent overall strategy in the development of those services to date.
Donald Drysdale , Assistant Director of Tax at ICAS, said, "It appears that HMRC has looked only at its own requirements and failed to consider the needs of taxpayers and their agents. There is a need to restore faith in e-filing and to overcome HMRC's loss of credibility following the repeated collapse of its IT systems. A successful e-services strategy will require HMRC and the tax profession to work together towards the same ends.
"Recent surveys of our members show widespread enthusiasm for electronic working, in spite of a very large number of complaints about HMRC's e-services. We believe tax e-filing should remain voluntary but they could become almost universally acceptable if systems are re-designed so that they are helpful to taxpayers and their agents."
The ICAS submission calls for an email option for all correspondence with HMRC. It also recommends the adoption of recognised best practice in the management of all HMRC IT projects, publication of all project gateway reviews and post implementation reviews, and a new approach to capacity planning to avoid system overloads.
Details of the Review of HMRC’s Online Services by Lord Carter of Coles can be found at: http://www.hmrc.gov.uk/consultation/carter-review.htm
The ICAS submission to the Review of HMRC’s Online Services can be found at: http://www.icas.org.uk/site/cms/contentviewarticle.asp?article=4257
Source: ICAS - 01 September, 2005
- Date:01.09.05 - 12th edition website launched
